Garage agreement likely; downtown hospital probable

Monday

Aug 21, 2017 at 3:40 PMAug 21, 2017 at 8:07 PM

STAFF REPORTS

UTICA — Plans for a new downtown hospital took another step forward Monday when the city of Utica, Oneida County and the Mohawk Valley Health System announced they've reached an agreement on how to split the cost of a new parking garage downtown.

The plan, laid out in a memorandum of understanding, calls for the county and the city to split construction costs 60-40, respectively, officials said. The health system would then operate and maintain the garage.

Earlier this summer the city determined it was not capable of splitting the costs 50-50 as initially discussed, and for a while it looked like the entire project might be derailed by disagreements over how much each party would pay. The Oneida County Legislature then said it was willing to consider paying up to 60 percent of the costs, the amount eventually agreed upon by both sides.

“It was a huge relief,” Perra said of Monday's agreement. “It allows us to move the project forward because we all know, without this parking deal ... we weren’t going to be able to move this project forward downtown and (would have to) look at alternative sites.”

Without a viable parking option downtown, the health system was “keeping our eye open on other sites," including its St. Luke’s Campus in New Hartford, Perra said. Officials were concerned, however, that by moving the site, the health system might have lost $300 million in state funding for the $480 million project.

Utica Mayor Robert Palmieri already has signed a memorandum of understanding regarding the proposed agreement, and Scott Perra, the health system's president/CEO, said he plans to sign it Tuesday. It's not quite a done deal, however, as the Utica Common Council must still vote on the agreement despite Palmieri's signature, and Oneida County Executive Anthony Picente Jr. said he can't sign on behalf of the county until after the county Legislature approves it.

He said he does not anticipate any complications on their end, however.

Financing plan

The current plan is for the hospital to be built in the neighborhood of Oriskany, Columbia and Lafayette streets and Broadway. The parking garage, which would go at a still unspecified location in the area, would contain between 1,400 and 1,650 spaces with 1,150 spaces earmarked for hospital use.

The new agreement reduces the city's financial burden by about $5 million as opposed to that earlier plan, Palmieri and city Comptroller William Morehouse said in a release. But with a 1,550-space garage costing an estimated $43.5 million, the city's annual payment could still be around $680,000 even with a 30-year bond, Morehouse said.

Despite the cost, however, "a facility of this magnitude is a once-in-a-lifetime opportunity for the region," Palmieri said. He later added that he believes "the pros certainly outweigh the cons."

Details on how the county would finance its share were not immediately available, but both the county and city will have to pass additional bond resolutions eventually to approve borrowing the money, said Steve DiMeo, president of Mohawk Valley EDGE, which has been advising the health system.

Officials have been talking to Empire State Development about some assistance through an Upstate Revitalization Initiative grant or New Market tax credits, Perra said.

"We may get more tax credits from Empire State Development," Morehouse said. "I know we're getting $20 million in tax credits. We may get $30 million. That’s going to change things, so hopefully that payment will come down. But we're basing it on $682,000 and we had the (certified public accountants) look at it. We had my office look at it and we feel we can handle that with the revenues that we will be receiving, the new revenues that are expected."

Utica Common Council President Mike Galime said that, as of Monday, the council had not received any legislation and had not "gone over the actual numbers" yet regarding the agreement. He said the council could get something either Tuesday or later this week, and it would then be sent to the Finance Committee.

Key project

Picente said the parking structure is a key piece of the downtown hospital plan and that he's "very pleased that the city has joined (him and the county) with their commitment to this piece."

"The ultimate goal here is to build a new, state-of-the-art, consolidated hospital in Utica and this was another piece of that pie," he said.

County Legislature Majority Leader George Joseph also said he’s glad to see the city getting on board with the hospital project and its associated costs.

“It’s in everybody’s interests to support the hospital in every way they have to participate,” he said. “So I think it’s good (the mayor) realizes that and he’s committed."

Palmieri said an agreement on potentially sharing revenue from the parking garage helped finalize the cost-splitting agreement. But Perra said that agreement is only that the health system, city and county would discuss revenue sharing if the garage brings in more money than it costs to operate.

Estimates put the costs for operations and maintenance at close to $1 million a year, he said. And the health system would also contribute annually to a service fund to pay for any major repairs. There are no projections yet on revenues from the garage, he said.